Wednesday, April 27, 2005

Of “CEOs Who Obsess” and the Prisoners of Guantanamo Bay

I know an FBI agent. Good guy, family man, and very interesting to talk to. He's worked 25 years in the business and seen it all.

A couple of years ago he came back from Guantanamo Bay, where he’d interviewed prisoners from the war in Afghanistan. The prisoners—to his surprise—had a great deal more in common with the criminals he’d experienced in the U.S. than with the great religious crusaders he’d expected to find in the makeshift pens of Guantanamo Bay.

For starters, religion wasn’t the issue for most of the men: they were fighting for the loot. Low birth order (being number five or six out of seven or eight kids in a family) often explained their dropping out of the family and winding up in the jihad, as it also frequently explains young men who leave their families and wind up in jail here in the U.S. Also, many of the men had alcohol and drug problems, like their U.S. counterparts.

But the most common element, according to the agent, was this: whatever they were caught doing—no matter how baldly they were caught in the act—it was never their fault, ever. It was always the other guy's fault—the guy who didn’t get caught:

“I was just a waiter in a restaurant when Mustafa began firing at the soldiers…” “I never had a gun—Khalid had the gun…”

“Mohammed made me get them the ammunition…”

I was thinking about these prisoners of Guantanamo Bay after hearing of Monday night’s appearance of Overstock.com CEO Patrick Byrne on Jim Cramer’s “Mad Money” television show.

As he does on conference calls, Byrne apparently spent great energy putting the blame for his company’s problems—and they are, in my view, vast—on the media and shorts, including me and this blog. Indeed, like those prisoners of Guantanamo Bay, Byrne seemed to blame everybody but himself for problems which, looking at the record so clearly spelled out in conference call transcripts and his own expansive quarterly shareholder letters, are in reality nobody's doing so much as his.

In my 25 years' experience of investing in and shorting stocks, it is a standard tactic, of CEOs whose companies eventually come to grief, to “blame the shorts.” Enron CEO Ken Lay, for example, squarely credited his company's crisis not on the fictitious numbers, but on “the shorts.” (Even if you're sick of Enron, you should read the new and excellent account in “Conspiracy of Fools”: the background to the fraud is not only compellingly told, but it is highly instructive for investors of all stripes.)

Indeed, my very first post on Overstock.com and Byrne, “When CEOs Obsess,” arose from his finger-pointing on Overstock's January 28th conference call. Byrne attacked not only short-sellers and the media, but snidely referred to Pacific Growth analyst Derek Brown as “my old friend and naysayer.” Brown's mistakes, apparently, being that he didn't recommend the stock, and he dared ask skeptical questions on otherwise back-slapping “great quarter guys”-type Overstock conference calls.

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My this-CEO-has-issues radar went up half-way through that January 28th call.

(Look no further than the case of Paul Jain, a now-convicted criminal who once ran a public company called Media Vision, for a terrific example of CEOs Who Obsess: Jain blamed shorts and journalists for his company’s problems. His best quote, as I recall it, came during a rant aimed at Herb Greenberg, a journalist who did one of the best jobs of financial sleuthing on record by exposing Jain’s fraud: “the shorts will rot in hell.” Of course, that remains an open issue, but Paul Jain himself did time here on earth...while Greenberg happens to be the same journalist who first began to raise questions about Overstock.com.)

And when, towards the end of that January 28th conference call, Byrne allowed a supposed stranger named “Bob O’Brien” to lay out an ignorant, paranoid, and almost entirely fictitious analysis of how something called “Naked Short-selling” was destroying NASDAQ stocks in general and Overstock.com in particular...well, I began to pay special attention to “Doctor” Byrne and his track record at Overstock.com.

And what I found was extraordinary, even in the annals of “CEOs Who Obsess.”

Examples are too numerous to mention here—please read the three-part “Mystery of the 38 Diamonds” elsewhere on this blog for a recap of the more egregious examples of how Byrne's boasts of new ventures and grand opportunities have come to little.

But until last week's earnings report and Byrne's weird explanation of his massive diamond play, it was that January 28th conference call and the apparently sham “question and answer” session Byrne conducted with "Bob O'Brien," a man who claimed to be a stranger, that stayed with me.

After being introduced by the conference call operator, O’Brien introduces himself to Byrne, saying his name “is not familiar” to Byrne, but he, O'Brien, is a shareholder who can explain the short-attack on Overstock and others.

(“Bob O’Brien” is not the real name of the Overstock conference caller—he uses a pseudonym, claiming fear of retribution from the shorts; more likely he fears prosecution for threatening the families of short-sellers through message board posts under his other pseudonym [“dirtydirtydeeds”] in which he lists wives, children and home addresses of those who offended him).

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Byrne likewise pretends not to know "O'Brien" even though two men had been in contact for several months prior to that call, according to Bryne's own message board posting two weeks later:

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2/15/05 "Obrien called me for the first time

shortly after the October conference call.

He talked about all of this…"

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Isn't that something? The CEO of a public company pretending he didn't know a guy during a long conference call with investors.

But it gets better: as the January 28th transcript shows, the two men continue with a ten or fifteen minute back-and-forth in which "Bob O’Brien" describes a paranoid conspiracy theory which Byrne pretends to be hearing for the first time:

"O’Brien" (to Byrne):

“I don’t even know if you know this, but Overstock has been listed on 5 different German exchanges. They’re in Frankfurt, in Berlin, Munich—you’ve got one other one. I am just going to guess that you didn’t call and ask for that.”

Byrne (to "O'Brien")

“It’s news to me.”

Towards the end of their little one-act play, Byrne furthers the apparently deliberate deception that he knew nothing of what “O’Brien” was saying:

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Byrne (to "O'Brien"):

“You know a heck of a lot more about it. I buy toasters and sell toasters….I don’t know any of the stuff you are talking about but it is interesting stuff.”

However, one month after these exchanges, on February 28th, Byrne himself wrote on his message board:

“By December of 2004 we found ourselves listed on five exchanges in Germany and one in Australia. Someone had gone to all the trouble to get us listed on these exchanges…”

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I am no professor of logic, nor am I an FBI agent or an attorney or a regulator. But based on the conference call transcripts and Byrne's subsequent message board postings, it would appear to me that not only did Byrne know who O'Brien was, but, as CEO of a public company, he deliberately misled listeners on his conference call by staging a supposedly spontaneous question-and-answer session.

Now, should this ever become an issue, Byrne's reaction will likely be to blame the shorts, Herb Greenberg, Jim Cramer, this blog, the Trilateral Commission, or all five together.

But none of us forced Patrick Byrne to pretend he was talking to “Bob O’Brien” for the first time in his life on a conference call with investors; or made him pretend he hadn't already been told his company's shares had been listed (for whatever purpose) on German exchanges; or directed him to say, for the benefit of shareholders, short-sellers and investors alike, “I don’t know any of the stuff you are talking about” on January 28, 2005 when he apparently already did know it "by December 2004," to use his very own words.

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Imagine, for a minute, that Jeff Immelt, the A+ CEO of General Electric, for whatever reason, allowed a man using a false name to get on the GE conference call with investors, pretended they didn't know each other, and then let the man describe a ficticious conspiracy by Siemens' healthcare people to illegally undercut GE medical equipment, for the purpose of drawing regulatory scrutiny of Siemens Medical...

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And imagine that Jeff Immelt later disclosed that he had known the man and had already heard the Siemens conspiracy theory prior to the call with investors....

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Would not Jeff Immelt be fired, in about ten seconds, by the GE board of directors for misleading investors, shareholders and the media alike?

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Makes you wonder why the Overstock.com board has not looked into the Byrne/O'Brien conference call, or the various cases where Byrne's hype never matched the results, whether it was "Project Rocket" or "Project Ocean."

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Perhaps the board stopped listening after Byrne told the Wall Street Transcript back in 2001 that by the year 2004 "I would want to see us well over $400 million and as profitable as hell. Making a ton of money. I want to see that next year."

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Or, maybe, as the FBI agent discovered with the prisoners of Guantanamo Bay, the Overstock board knows that that whatever it was that happened on that call, it wasn't Patrick Byrne's fault.

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Which would also explain why that same board allowed its CEO to go out and make a speculative diamond buy for $7.2 million, described as "the steal of a lifetime," not long after the company had just finished writing down the last of his previous large speculative buys: $5 million worth of Franck Muller watches.

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We will be exploring that diamond "steal of a lifetime," and, perhaps, other facets of the Overstock saga later in the week.

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Jeff MatthewsI Am Not Making This Up

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The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.

34 comments:

GREAT post. so was the microsoft post from several days back. At the time of the infamous Feb conference call, OSTK was trading for roughly a 1% free cash flow yield, something not even Google can boast. At 150x next twelve month EPS, Byrne has been acting as though his stock value has somehow been hampered by naked shorting and dubious actors. Good companies do not inflate diluted shares by 6.4% and take debt/capitalization from 1% to 40% in one quarter. The best that Byrne could hope for at this point is an indefinitely-long site outage at Ebay.

Jeff has come after his two latest favorite targets, Patrick Byrne, and Bobo, again.

Let’s see, this time around, while discussing how ‘squealing CEO’s’ are the most likely to be conniving cheats, and deserve to be shorted into oblivion, (Byrne, as you know, keeps saying that his stock price per share doesn’t concern him at all, but, naked short selling does.) Jeff uses the following phrases:

Of DDD’s reluctance to ‘come out’: fears prosecution for threatening the families of short sellers

Back to the validity of the scenario, again: Paranoid conspiracy theory

Of the interchange (again): apparent deliberate deception

And again, the validity question: Fictitious conspiracy

And, AND, a description of Herb Greenberg, as “a journalist who did one of the best jobs of financial sleuthing on record by exposing {Media Vision}’s fraud.”

So, we're back to discrediting the messenger, once again, to avoid the message. Oh, that's right, the message is 'ignorant, paranoid, and almost entirely fictitious.' My bad!

One might get the idea that Jeff doth protest too much. Or, he enjoys, as does HG, the beating of his own heart, and the sound of his own voice. This was a rather longish piece on the blog, and indicates that Jeff may have a rather strong jones for our boys.

It seems like hardly a week goes by without a slam against OSTK, Dr. Byrne and yours truly. Gets so that you can set your watch by it.

Again, you characterize Dr. Byrne as blaming short sellers for everything.

Even after having been corrected about a million ties by now that Naked short selling is an illegal manipulation practice, and legal short selling is...well....legal.

Characterizing me as a kook.

Characterizing Dr. Byrne's conference call as a sham.

We've already been through this too many times for me even to be interested in, however I will say this: If you live in a world where the lapdog can be called a financial journalist, then I suppose anything is possible.

For the record, several of the investors on the Yahoo boards have had their personal info and address posted numerous times. I returned the favor by posting what might be Marc's address - who is a public figure by virtue of his numerous appearances on TV, and who I believe works from home - thus, it's his office address.

Find a post where I ever listed his wife's name.

Again, a lot of making it up. Sticking to the script. Not a particularly interesting script, but you are tenacious, and I presume, have a big short agenda.

#1) There was no NCANS when I made my appearance on the CC. So Dr. Byrne was not my partner in anything.

#2) I did not break down for Dr. Byrne all of the various aspects of how a criminal stock manipulation works when I chatted with him back in October - I was still formulating the theory and collecting the evidence.

#3) Dr. Byrne, I presume, doesn't remember a lot of people who chat with him for 5 minutes here and there. He is CEO of a large, profitable internet company. No doubt you can't imagine what that is like, having never been the CEO of a large company, however I can assure you that your hallucination as to how it works is incorrect.

#4) It is you I was describing - dishonest, and boring. I thought that was obvious. Apparently it needs to be spelled out. Your agenda here is clear: A) Pretend that there is no naked short selling problem (I noted that you didn't respond to the Shapiro document - hardly surprising given your intellectual capacity). B) Demonize and attack the integrity of the messengers when you can't refute the message. C) Write a negative piece about OSTK at least every few days, as either you are short the company, or your buddies are.

Those are dishonesties, and at the 40th repetition of the "there is no naked short selling problem" message, proven to be false at least as many times, they are also boring.

So let's keep it simple: I believe that you are dishonest, and boring.

Yeah, Mr. Mathews' numerous postings on the same conference call has gotten tiresome.

I don't see anywhere in this posting that he says that "there is no naked short selling problem". That's a continual straw man you seem to be fighting.

I have no idea who is dishonest here and who is honest. I do know that if Pat Byrne is being honest in his stated intent, he ought to change his modus operandi, because it bears a striking similarity to dishonest CEOs of the past.

Saying that you don't worry about your stock price is not consistent with spending an inordinate amount of time discussing issues that impact your stock price and not your company. It also isn't consistent that a stock buyback is announced at the same time even more securities are filed on the shelf, as was done yesterday. That tells me that OSTK spends way too much time worrying about its stock price.

"Bob": you first called Patrick Byrne in October 2004; January 28th you told his conference call listeners your name was not familiar to Patrick Byrne; February 15th Patrick Byrne admitted he had spoken with you--busy as he was, being a CEO and having to post auction updates every 10 minutes on his message board and all; February 28th he said he knew about the German and Australian exchange listings by December 2004.

The only thing worse than being dishonest, "Bob", is getting thrown in jail for it. Martha Stewart did not get convicted for her stock trades: she got convicted for lying about them.

And you are treading a very fine line here, misrepresenting yourself on a public conference call and dragging people's home lives onto message boards.

Incidentally, I noticed today that Bloomberg seemed to be running an OSTK ad about every 15 minutes. I'll admit I don't watch much TV outside market hours and have no idea whether this is reflective of overall advertising trends, but this limited datapoint suggests that Byrne may have turned the "marketing expense"spigot back on.

One of the things I agree with Cramer about is that word-of-mouth no longer cuts it online. Building and maintaining an online business is requiring ongoing advertising dollars.

Point to the area of the transcript for us all where I misrepresented myself.

Or did you just make that up?

The funny thing is, how does anyone even know if that was "me?" Versus a stand-in, or a buddy, or one of my helpers, or Bob 2, 3 or 4?

You don't.

You don't know if the video shadow was me or the camera man or a 45 year old Vietnamese woman or the cab driver. You don't know how much my voice was altered on the call or the video, or even if it was "mine." You don't even know if there's one or three or twenty people who collectively are "Bob".

In short, you know nothing.

At least I know what I don't know.

Jeff, babe, I'll break it to you gently - figure it out. There is no Bob O'Brien. It is a nom de plume. I/we could be posting from New York or Vegas or Texas or Vancouver or Acapulco or Turks and Caicos or Tokyo. The part you are having difficulty with is that Bob O'Brien is nothing more than a virtual representation, a silhouette of a person who is taking on the bad guys.

Your problem with the threats about fine lines and all is that there is no person to threaten, and in fact that you are dealing with a swarm, and it is hard to intimidate a swarm. "I'm" one of them. I would have thought that was obvious by now. Do you believe that the websites are created by one person? That the documents and charts and graphs and all are one man/woman? That "I" know how to do everything from analyze REITs to write editorials to program HTML to write elaborate calculators?

Truly?

Figure it out. Bob O'Brien is nothing more than an AKA for a swarm of folks who are on to the hedge fund/manipulation scam and are doing something about it.

This isn't hard to get. And the only people that have anything to fear or should feel threatened in any way are those that are doing the manipulating. They will get their full legal just reward, I/we can assure you. And that apparently makes the bad guys uncomfortable.

It should.

It's designed to.

And it is wonderful to see that it is working.

So save the threatening pseudo-legal banter and the veiled threats. If Marc doesn't want his address up, guess what? Remove it from the search engines. Duh.

It's been a busy earnings season and I've only just now heard out the entire replay of the Overstock (OSTK) earnings call from last week. (Overstock's CEO, Dr. Patrick Byrne is something of both a control freak and an erudite, so he likes to take a long time, and use big words, to answer simple questions. Hence, the conference calls contain a great deal of what my teenage daughter would term "overshare." And not particularly relevant "oversharing" at that.) In any event, Overstock's call is one for the ages, and I urge all to listen to a replay or read the transcript, to the bitter end. And it is quite a bitter end. Doctor Byrne, whose lot in life is that he is the son of a famously A+ insurance executive, Jack Byrne (one of Warren Buffett's faves), does not spend as much time as usual hectoring the short-sellers who seem to get under his skin (despite the fact that his stock has tripled in the last year), although he does get in the usual zings about ace financial columnist Herb Greenberg and other journalists whose main fault appears to be that they do not believe the Overstock story. Instead, a caller named Bob O'Brien hijacks the Q&A, with Dr. Bryne politely listening, and describes a massive conspiracy against Overstock and other small companies by short-sellers led, in this case by David Rocker of Rocker Partners. "I know this probably sounds a lot like the X-Files," Mr. O'Brien says, before launching into an X-Filian conspiracy theory that concludes that these companies "have been gang raped by mountain men... " [i.e. Rocker]. Well, I worked at Rocker Partners from 1989 to early 1994 before starting my own long/short fund, and I know the amount of research he and Marc Cohodes have done on frauds such as Lernout & Hauspie. I also know Herb Greenberg and some of the terrific work he has done on frauds like Media Vision. And it is my experience that any time a CEO spends as much time as Doctor Byrne attacking short-sellers, rather than simply running a really good business ... then it is usually -- not always, but usually -- the short-sellers who are on the right track, not company-defending "X-Files" type conspiracy theorists such as Bob O'Brien. As a result of the Overstock conference call, I am moving OSTK to the front of the line in potential short sale candidates I am monitoring, and have bought puts in case things unravel more quickly than I suspect at the moment. As Ray Davies of the Kinks sang a long time ago, "Paranoia is a great destroyer." In fact, it's a trait I like to see in potential short candidates. And there was paranoia galore on that Overstock call. OSTK puts

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Patrick simply doesn't play the games the "Good Old Boys" would like him to , and they just can't stand it, right Jeff? Oh and BTW, guess who's back on REG SHO (immediately after their earnings I might add)?

http://www.nasdaqtrader.com/aspx/regsho.aspx

From a Motley Fool article on their 1Q..

----Revenue: Up 102% compared with the same period last year. The triple-digit gains are still there! Customers are finding Overstock.com just fine.

Operating loss: The net loss was 91% larger than the year-ago quarter, and it missed analyst estimates by a whole nine cents. That loss is a Lilliputian $4.2 million when compared with the massive cash and marketable securities balance of $192.8 million (although losses are never a shareholder's best friend).

While the gross profit grew a robust 194% compared to the year-ago period (that's good!), the CEO said (in the first paragraph of the press release!): "I overspent in marketing by 1-2% of sales, but I believe we can cut this back and still grow." Besides knowing where the buck stops at Overstock.com, make the computation the CEO didn't. 1%-2% of sales is $1.6 million-$3.2 million -- which would have narrowed the magnitude of the loss.

Gross margin: At 15%, up from 10.3% in the comparable quarter a year ago, the company is hitting the goal it set for itself and sees the potential for higher margins in the future

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Jeff, wanna bet the do 1B in revs and go positive in earnings for 2005?

The "mfairview" post with the Street.com earnings results has been deleted because nobody here has anything to do with Street.com, and hence they belong on some message board.

For some weird reason--probably the voices in his head--"mfairfiew" thinks that because I used to write for Street.com before starting this blog, that Street.com is relevant here.

It is not.

Although it is nice of him to reprint a piece of mine from early February, which, it turns out, was highly accurate: shortly after that piece, Overstock went off the SHO list, and the O'Brien/Byrne conspiracy theory was proven as the lunatic rant of a paranoid mind.

Or, maybe that's "ten or twenty" paranoid minds--for now that we have put "Bob O'Brien" on notice for posting personal information in a threatening manner on message boards and for taking part in what appears to be a deliberate attempt to mislead shareholders of Overstock.com on a conference call, he is claiming he is not "Bob O'Brien" at all, but perhaps a "Vietnamese woman."

(I did not make that up, by the way. He said that.)

No, "Bob," what you are is a single white male, a loner, probably manic-depressive with passive-aggressive tendencies, who has gotten so far deeply into something you know so very little about that you now realize it will be very hard to get out.

Not that I'm surprised you'd delete a posting that cast light on the fact that your buddy's company is fledging (Where is that series of damaging articles on an obvious mismanaged company Jeff?) Surely you dare not bite the hand that feeds you.

The problem is that you try and come across as some superhero investor with in depth perceptions on companies and the market yet you fail to disclose your hedgefund's interest in those companies you speak of. So whereas you're short on OSTK (as per your professed articles), we see a slew of repeated negative, yet quite obviosly one sided articles on them. In trying to bring up something a bit closer to home, with the publicly posted recent www.thestreet.com earnings, you chose to ignore it through censorship. Good job Jeffy-- No funny business here. Yeah right!

You mention that bob should be scared? Try looking in the mirror. How long do you think it will take to have you answer to Fair Disclosure, given your profession, with your quite public announcements?

I don't know who is right here, who is lying, or who is manic depressive, but I do know that this blog is beginning to sound more like that of some immature school children than (allegedly) informed investors. Jeff, I enjoy your articles and commentary, but the back and forth with all of these posters is getting to be a bit much. Stick to what's relevant and let the kids rant and rave all they want. Much like the "Dr." should focus on the company, not the stock/shorts, you should focus on the blog, not the fairly useless commentary.

Interesting that you claim that I'm white, single, manic depressive, etc. But most interesting that you make two claims which are clearly problematic from a fact-based standpoint:

1) That I post threatening material.

2) That I am now so deep in something that I don't understand I find it hard to get out.

Let's look at #2, as #1 I address pretty thoroughly at the NCANS.net site on the news page.

Here's what I think: A group of hedge funds that are used to having their way with the market, illegally manipulating it, and running with the tacit approval of their network of crony regulators and sycophant reporters/editors, dislikes the amount of heat being directed at their little scam. They especially dislike that now there are senators asking the SEC tough questions, and that the DTCC and the SEC are forced to be re-active to a growing groundswell of outrage and dissatisfaction. This annoys them, and threatens their ability to make easy, illegal money via manipulation. The perpetrators are for the most part fleshy white men in their 40's to 60's who believe that the rules don't apply to them, and like all bullies, when challenged, call on their network of toadies to do their dirty work for them (bloggers, and a senior editor at Barrons - anyone asking themselves why a senior editor at Barrons gives a hoot about some events on a message board can join me in marveling at the irony).

Now, you say I have no idea what I am involved in. That implies that you do, and also has a vaguely bullying/threatening tone. So why don't you tell us all what "I" am involved in, Jeff?

You also miss the point that it is a syndicate of people that contribute to and maintain the websites, not just one. That went over your head. Huh. I could try to explain it again, but I think everyone else got it, so why bother?

I know the money is big. I know that we are up against people with power. I understand the element of danger, the criminality inherent in the combination of wealth, power and larceny, and access to those who make the rules.

As to your prosecuting bit, sorry, Charlie, I spoke with two attorneys who indicated that you better go back to law school - posting publicly available information and inquiring about the weather and the wellbeing of one's family doesn't constitute any kind of a threat in this universe, and has no basis for any sort of prosecution, so yet more threatening gibberish designed to intimidate, and based in nothing resembling fact. That's the long way of saying you made it up.

I'd advise you to start writing your next OSTK slam, it's been, what, 3 days? Don't want to let the lapdog catch up to you on that score...although given his 33 articles in one year on an obscure Midwest REIT by the name of NFI, whose only claim to fame is being a rocker short, you have large suck-up shoes to fill.

"Street.com, for better or worse, is irrelevant to me, which is why I do not write about it."

Hm.. Interesting.. Sure I'll bite.. Try these facts.

David Rocker is head of Rocker Partners, a large hedgefund known for shorting stocks (they've also manage to short several stocks that coincidentally (or is it conveniently) appears on the Reg SHO)

You worked for Rocker Partners for several years.

You write for Street.Com (btw- your article on shorting OSTK was printed 2/05 which means you were still writing articles for Street.Com while your blog was active which is contrary to your claims)

David Rocker is a known big short on OSTK (as are you)

David Rocker is also friends with Jim Cramer (the one that started street.com)

"Ace Reporter" (your words) Herb Greenberg writes for street.com.

David Rocker holds MILLIONS of shares of Street.Com (a ridiculous company to invest in purely on financials-- I wonder what else is going on there?). In fact, aside from Jim Cramer, David is the second largest shareholder of Street.com

David Rocker called into an OSTK cc and publicly argued with Patrick Byrne (Why no rant from you about this blatant public act I wonder?)

Patrick Byrne has also met David Rocker elsewhere where he claimed DR incites arguments.

Sufficit to say David Rocker and Patrick Byrne are not friendly with one another.

You, "Ace" and Cramer all bash OSTK regularly (You really are the worse of the bunch with about 1 slam every few days).

Also, since you enjoy pointing out Byrne's misstatements, how about Jim Cramer claiming to have ONLY met David Rocker once at the local grocery store. I suppose he forgot about the time David was on his show and the fact that David owns 2M+ shares of his company's stock.

Did I cover everything and do you see why your connection with street.com is material to the OSTK conversation? Focused enough for you?

As I previously mentioned, you guys are so incestuous, it makes Deliverance look like a Disney film.

To those who are convinced that naked short sellers are behind the heavy short interest, and in some cases, price declines of the stocks on the Reg SHO list I pose the following questions:

1) How many of these companies are fundamentally flawed businesses that have questionable going concern value?

2) Of those companies that are actually financially strong enough to be going concerns, how many are overvalued to wildly overvalued on a fundamental basis?

3) Of those not fitting into the first two buckets, how many financially strong companies that appear fairly valued or even undervalued have questionable to suspicious accounting policies, i.e. raising equity to pay a dividend?

Having perused the SHO list a number of times, I'm struck by the low quality of most of the names on the list. Human nature being what it is, it appears to me that many people who are crying about hedge funds and short sellers are retail investors attempting to place blame for the poor results of their ill made stock purchases. You'll note that Fidelity and Janus and American Funds haven't exactly been outspoken about naked short selling abuses, and these fund families are generally long only, so would be severely impacted by naked short selling were it a major problem. Dreman Value Management is the 3rd largest holder of NFI. Have they been outspoken about naked short selling? If so, I haven't seen it (which in no way means they haven't said anything. if they are on record saying that naked short selling is affecting their investments, please post).

I read this blog because Jeff provides INVESTMENT insight. And as a successful manager over a prolonged period of time, his views merit attention in my mind. Jeff is arguing about the prospects of OSTK as a business and as an investment. O'brien or Ming Lai, or whoever he is, clearly disagrees, thus he's long OSTK. However, in all his/her/its rantings here, never once has a bullish fundamental argument been articulated. Neither of you is going to change each other's mind, so please, if Jeff posts on OSTK, can the X-Files crowd resist the temptation to post. And likewise, if the conspiracy crowd does post, Jeff, just let them be.

Btw, mfairview, way to change John Rocker to David Rocker. Your specious argument was even more so when you were attacking a racist relief pitcher from Atlanta.

Hundred, you've apparently not been keeping up. At this point, it's not a question of whether Naked Shorting exists but whether the SEC will (or can) do anything to stop it. By their [SEC] own admission, it has happenned on a scale where by it would be better for the markets that they grandfather prior violations (as of Jan 05) then to enforce them to buy in (e.g. too big to fail syndrome). I find it strange that ordinary investors don't find that stat bothersome. If you guys have extra money to throw away, by all means throw them my way.

Your comments regarding Jeff's comments on OSTK is laughable. I'm curious which blog you found more insightful... The one where he rants about OSTK allowing someone to auction a solution for "Unlimited Energy" or the 4 blogs where he pontificates as to how 38 diamonds mysteriously disappeared from their stock?

BTW Hundred- Those in glass houses shouldn't cast stones as the addage goes. I assume NFI is the company you were referring to in your coy dividend comment. If so, your blatanly misunderstanding of their business model and legal obligations are equally embarrassing.

The reason that you aren't hearing bitching and moaning from the Dremen crowd is because they are part of a system, which they have to co-exist peacefully within, and which is powerfual and vengeful.

This is a huge problem, wherein nobody wants to be the one to say - yup, it is a huge problem.

The NASAA is on record saying that it is a huge issue. Are they confused? Is the NASD confused?

I get so tired of having the messenger attacked - it's always the company is bad, or the fundamentals are weak, or anything but elements of a financial system which has been larcenous in the past and present are abusing loopholes to act larcenously now. Tut tut, it's never that. It's always "everything is working just fine" even as the DTCC stumbles all over itself to avoid having to do the first bit of disclosure, and the SEC put its feet in its mouth to try to explain how its good not to disclose basic numbers that any reasonable person would want to know.

Tell us all, why is it a good idea to keep the clearing and settlement system a black box?

Why is it a good idea to let an industry that is constantly being caught doing bad things regulate itself?

Why is it a good idea to hide the level of fails? Why is it good to protect everyone here but the investor?

Why is that all fine and good with you?

We have a clearing system that is a monopoly, with no competition, and it is a self regulating entity. We have exchanges that own that monopoly which are self regulating entitities. We have brokers that own the exchanges that are self regulated (via the NASD).

Does it bother anyone else that the entire system is operating on the honor system, and that the same guys own the whole thing, and that different aspects of their game are being shown to be crooked, but almost always by outsiders? Mutual funds, analysts, now the specialists...but hey, trust that we are doing a good job, and don't you dare ask us to make any sort of disclosure...

Byrnes and his trail of LIES and association with SCUM like Bobo... Amazing.

Where are thou SEC?

---

TECHNOLOGY TRADER By BILL ALPERT

A Family Threatened on the 'Net

WE FINANCIAL WRITERS spend our time looking for dollar bills lying on the sidewalks of Wall Street, and hundred-dollar bills offered at suspicious discounts. But sometimes we take the more redeeming role of a Neighborhood Watch, shouting out when we see someone threatening a kid in a wheelchair.

I'm shouting.

The online debate over some stocks has become dangerous enough that the cops should take notice. In recent weeks, a pseudonymous message writer on Yahoo! chat boards has posted thinly-veiled threats against the the wife and disabled kid of a hedge-fund manager. The writer of the threatening messages keeps changing his Yahoo! screen names, but under the pseudonym "Bob O'Brien" he operates one Website that condemns shortselling and another that promotes the sub-prime mortgage-lender Novastar Financial (ticker: NFI), a company with which he claims no affiliation. I can't contribute to the world's knowledge of Novastar and I haven't the slightest idea who "Bob O'Brien" really is.

But in e-mails to me, and on one of his Websites, "O'Brien" acknowledges that he wrote the Yahoo! messages publicizing the location and identities of the family of Marc Cohodes, a money manager with the hedge fund Rocker Partners, that "O'Brien" blames for selling Novastar short. The Yahoo! messages read like lines from a gangster movie or an anti-abortion Website that targets doctors.

On April 19, "O'Brien" used a screen name "dirtydirtydeeds" to post on the Yahoo! chat board devoted to Novastar Financial. The subject line of one message consisted simply of Cohodes' home address. The message said:

This is coming up on game overtime. Figure it out. Your playbook is known."

A few days later, using the same screen name, "O'Brien" wrote:

"[Cohodes address]

[Cohodes son] doing well today, I trust?"

There were other, similar messages, and not all of them under the same screen name. As it happens, Cohodes' son was born with cerebral palsy and gets around in a wheelchair. The message board carried links to a picture of Cohodes' house and his son.

In other messages, "O'Brien" asked readers for the home address of Herb Greenberg, the columnist at our sister organization MarketWatch.Com.

Yahoo! eventually pulled the messages from the Novastar board, but you can still find messages from August 2002 that attacked Cohodes on the Yahoo! message board for ESS Technology. That's when Barron's quoted the hedge-fund investor on the business problems facing ESS, a manufacterer of chips for DVD players. Cohodes was right, and the stock has since dropped from 13 to 3. At the time, Cohodes asked a judge to order Yahoo! to identify the writers of the anonymous threat, but the judge declined-saying the threats were harmless rhetoric.

Cohodes and his family feel endangered by the latest Yahoo! board threats, and only a callous person could disagree. "Are you threatening to kidnap them, are you threatening to kill them...what's the deal?" Cohodes says about his anonymous stalker. "A guy threatening a severely disabled kid is pretty low."

I asked "O'Brien" how his messages could be read as anything but threats. At first, "O'Brien" denied that Cohodes had been threatened. When I forwarded copies of the threats, O'Brien didn't give a responsive answer. Instead, he offered "context," saying his friends had been abused in anonymous messages that he blames on Cohodes.

Why he blames Cohodes is the scary part, because in his volumes of Internet postings, "O'Brien" shows no evidence that Cohodes and Cohodes' family are anything but the victims of a dangerous-sounding man. I hope that public-safety officials figure out who "O'Brien" is.

Funny.. Thank god in today's day and age one does not need to work for a publication or own a publication to get the word out...

It's rather interesting to see how senior editors and field reporters interpret their story given their news feed. Would be interested in hearing how others would interpret it.

http://ncans.net/alpert%20interview.htm

-----

Bob O'Brien's Email Exchange with William Alpert of Barron's

The following email exchange took place the morning of April 28. In the interest of open and full disclosure, I felt that it would be worthwhile to air it, in the same spirit of the prior discussions with the WSJ and such.

The tenor of the exchange is that I somehow have threatened Marc C. by posting what I am guessing was his address and family names and inquiring as to their continued disposition, on Yahoo. I obtained that information by googling his name and using a search engine that scans publicly available data. Now, if Marc or Barron's finds that sort of thing to be threatening, I have to disabuse them of that notion - it wasn't intended as such, merely as an indication as to the kind of data that is out there and the facility with which it can be had. Now, the written word can sometimes lose nuance, and thus perhaps Mr. Alpert felt that I was being threatening. How so is lost on me, and not immediately obvious, unless the posting of public info is somehow threatening - in which case the phone book must be a hotbed of threat.

So not stellar behavior from your's truly, but also understandable, I think. Certainly in the context of the overall tone of the board during that period, it fits. As well as in response to despicable attacks on a woman who is doing nothing more than attempting to shine a light on the cockroaches who are engaging in an illegal trading activity. If I've offended anyone I apologise - but if you don't want your data up, take it off the web. Duh.

_____________________

Dr. Mr. O'Brien.I'd like to hear from "Mr. O'Brien" and ask him about the recently posted (and deleted) Yahoo message board threats against the family of M C, of RXXXXX Partners. My phone number and email are below.

I'd be very grateful for a speedy response.

Thanks,

Bill Alpert

Sr. Editor

______________________

Mr. Alpert:

There weren't any threats. None. I would defy anyone to find any -that is an inaccuracy, and one that is being deliberately propagatedin order to demonize and libel me.

I posted what is publicly available as Mr. C' home/office address in Marin, after a number of presumably paid bashers posted a number of the board regulars' CV on that message board. I felt that Mr. C' address is much like that of public figures in Hollywood, where they sell maps and take buses around to show you where the "stars" live. Given Mr. Cs' prominence and many TV appearances, I likened his celebrity to one of any other TV personality, and given the ease with which one can find his address using search engines such as Zabasearch, not exactly a state secret or high level confidence. If Mr. C doesn't want his information available on the web, I would suggest that he should take steps to remove the information - the complaint is akin to whining about having his number listed in the phone book, and then being shocked when it makes its way into another public forum.

Hint: If Brad Pitt doesn't want his number out there, take it off thesearch engines. Simple.

In retrospect it was not my finest moment, however context is important - several retired folks whose only offense is to post on the Yahoo message boards have had their lives paraded around those same boards by the bashers, who work in organized shifts. One woman is having her dead sister's name used as an ID now, and her brain damaged nephew's name used as a different alias, by the same crew that published her address.

I consider Mr. R and Mr. C to be prominent public figures - celebrities of a kind, given Mr. R's appearances on numerous investment talk shows, including on that of Jim Cramer, who indicated that he'd only met Mr. R at a grocery store - and before Congress, where he testified. And as discussed before, Mr. C has also been on numerous programs. That makes them celebrities. If their addresses are on the web, I have no problem sharing publicly available information. I didn't realize that it was against Yahoo's TOS, still haven't had a chance to read that entire tome - you should know that they also will remove your posts and ID if enough people complain, which the bashers did a year and a half ago and successfully had my original ID removed, so it's nothing new in terms of intimidation and harassment techniques.

I presume that this entire tempest in a teacup is the latest in an attempt for multi-millionaire hedge fund managers to play the role of aggrieved victims? You might think that they had better things to do with their time - they must view me as quite a threat to their game. I can only take that as flattering.

Let me know if you have any other questions.

________________

From Bill Alpert:

Thanks for your response. Other questions:

1) Is there any reasonable interpretation of your messages aboutC' wife and kid, other than as threats or incitements to others? 2) If this is all innocent repartee, why don't you identifyyourself and your interest in the Novastar debates? 3) Can you refer me to the "basher" postings of personal/familyinfo about other message board members? Did C make thosepostings? 4) In your last graph, you sound like you're encouraged by thereaction to your postings about C's family...Is that so?

______________

Mr. Alpert:

What threatening messages about M's wife and kid? Kindly direct meto the threatening messages that you are referring to. I don't recallthreatening anyone, and that certainly has never been my intention.The notion that a multi-millionaire hedge fund manager can bethreatened by a lowly anonymous message board poster is somewhatlaughable, truth be told. But I'll play along.

There are a host of entities that are interested in locating andidentifying me, some of whom presumably do not have my best interests in mind.

There is no way of knowing who made the offending postings - theboards are anonymous. Again, M's address is a matter of publicinformation. Can you identify to me how or why it should be viewed as somehow sacrosanct, given that fact?

I don't view the reaction to my postings as flattering in the least -again, I freely admit that it is not my finest moment. I am flatteredby the apparent level of attention that full page articles in the WSJ(your sister pub, and one that has written conspicuously negativepieces about NFI, among other RP shorts) would imply for a humblemessage board poster - that seems completely unwarranted.

Look, there is no threat intended to M or his group. His address ispart of the public record. That is fact. You can look it up. Anyonemotivated to do so can. What's the big secret? Why is this in any waynewsworthy, especially from a senior editor of Barron's? Am I missingsomething here?

_____________________

"What threatening messages?" Help me understand the meaning of messages like these:

04/19/05 04:07 pm Msg:

How is the weather up in Ross, anyway? Sunny days" Todo Bien? IsXXXX well? XXXXX good? Everything working out OK?

Wanna talk about XXXXXXXXXXXX as well?

Still feel like playing?

This is coming up on game over time. Figure it out. Yourplaybook is known.***

04/22/05 10:03am Msg:

XXXXXXXXXXXXXXX, Ross CA MXX doing well today, I trust?

_________________

Mr. Alpert:

Context. There are preceding messages where MXXy's brain damagednephew is being mocked, by name. And her dead sister's name being used by another basher. I believed that I was responding to M or one of his lieutenants, and wished to let them know that public information could easily be displayed about his loved ones as well. Here is a fun example of the type of posts to which I am referring:

duuuuuuuuuuuuuuuuuuuuuuuuuuuuuh------------If you click on the profile, you get as one of his hobbies "drooling."

I could spend some time to dig up the ones where MXXy's deceased sister is mocked as well, if you are particularly interested. MTTTT is MXXy's brain damaged nephew. Starting to get a feel for the lay of the land?

I inquired as to how M's folks are doing, in a spirit ofreciprocity. I believed that I was responding to him. Given yourunusual interest, I now suspect I was correct.

The message boards are sometimes an ugly place. I usually try to takethe high road and ignore these kinds of things. I lost my temper giventhat MXXy is a sweet, elderly woman who loves her deceased sister and her nephew. In retrospect I would have chosen my response with more care. I suspect we all have things we would go back and dodifferently. Again, the context was in response to equally ugly postsattacking someone who is helpless, by someone that I believe couldwell be Marc or one of his quislings.

As to the part about the game book being known, that IS intended to be a warning - it is a reference to what I believe is a systematicmanipulation of NFI's share price. I could be wrong, but it is myopinion that someone is gaming NFI's price, and M is known to beone of the groups that is involved in shorting it. Do I havedefinitive proof? Nope. Not unless one can review the trading recordsand see. Is there a smoking gun? Yup. I believe that there are plentyof indicators that manipulation is occurring. Other ID's that havebeen associated to M's group have been seen bashing NFI, so itisn't a stretch that he might be on the boards doing so. And I reservemy right to express my opinion.

______________________

Mr. Alpert:

Here's another gem, which has since been removed by Yahoo - but youcan read the memo field and get verification of what the message wasabout:

Yahoo! ID: lXXXXXXXXXXXXXX

Subject: Impersonation

Message Board: nfi

Message ID Number: 294049

Type your feedback here: COMPLAINT: This guy is stalking me and using my late sister's personal information, including her name, her address etc. Please act immediately.

-------------

This is from a woman in her 60's. Now, you may believe that shedoesn't count, or that two wrongs don't make a right, but at the endof the day, these are the kinds of antics that are going on at thatboard - and to single my messages out and ignore the context of theoverall tone and abuse going on is disingenuous, IMO. Again, this is aprivate citizen, not a public figure, that people I strongly believeare associated with M are doing everything they can toviolate, and I got annoyed, and posted his publicly available data.There is no there there. End of story. Nothing more. It was a responseto many prior incidences of terrible behavior by the basher crewworking the boards, and eventually I had enough. Clear?

________________________Alpert, William to NCANSmail More options

Are you James Dale Davidson ?

________________________

To: Alpert

Ha ha ha ha ha. You're kidding me, right?

No. The only one that advances that lunacy is a presumably paidmessage board basher who posts 50 or so times per day, and appears to have been stalking me on various blogs - his agenda appears to becharacter assassination. he is either a pro, or unbalanced. My gutsays pro.

So not JDD. I'd never even heard of him until that guy brought it up.It is funny how insidious the rumor mill is, though.

I'm just a private citizen, nobody famous or notorious, and will nodoubt disappoint one and all at my ordinary-ness once I step forwardand take off the mask. FWIW, I've been asked if I'm Penn Gillette (ofPenn and Teller), Ben Stein, and a host of other folks.

I'm not any of them, either, although nobody has ever seen Penn and Iin the same place...

Help me understand something - why is a senior editor of Barronsinterested in a trivial conflageration on an obscure message board fora small midwestern MREIT? What's the news value? Why does anyone care, much less you?

Bob's ability to hide his true idenity this long tells me he has not " gotten so far deeply into something you know so little about......." ...It also tells me he it trying to cause a squeeze and he is wrong about NFI ...Just like he was wrong about OSTK..

You know, the shorts in NFI have been wrong now for almost 3 years. That's a long time to be wrong. A long time.

As to OSTK, let's talk again in a year, hmmmm 'kay? By then they will be over a billion in sales on their way to 2 billion, and you can crow about how prescient your observations were back when they were in the low to mid-30's.

As to hiding my identity for so long, there will likely be a piece in the WSJ soon that purports to know who I am. I am confident that it will be filled with speculation and short on proof. If I'm right, they have gone off on a tangent and either "found" one of the guys that contributes content and helps with the web stuff, or just some poor shmuck that they liked because of his name. That's the info I am getting, but who knows.

In the meanwhile, I can assure everyone that I know exactly how big and bad the syndicate I am playing against is.